Press Releases, 2/22/2017

WTO agreement reduces businesses’ trading costs

Press release 41/2017
22 February 2017

The World Trade Organization’s (WTO) Trade Facilitation Agreement (TFA) enters into force on 22 February 2017.

The agreement deals with fees and formalities connected with export and import, as well as transit. TFA aims to expedite customs clearance, reduce unnecessary paperwork and improve predictability and access to information.

According to Minister Kai Mykkänen, implementation of the TFA is very important to Finland. “The agreement will facilitate more efficient movement of goods across borders, to the benefit of both businesses and consumers. As part of global value chains, intermediate products, parts and components, in particular, cross customs borders multiple times. The imports and exports of the Finnish trade in goods consist largely of such intermediate products.”

Small and medium-sized enterprises, in particular, will benefit from the simplification of trade procedures.

The agreement also supports the integration of developing countries into the global economy. Finland in cooperation with the World Customs Organization (WCO) will contribute €3 million in order to support the implementation of the agreement in Eastern and Southern Africa.

The OECD estimates that full implementation of the agreement would reduce commercial enterprises’ trade costs by 12–17 per cent on average. Savings of even one per cent represent a cost reduction of approximately $40 billion at the global level. Globally, about 7 per cent of the value of trade is wasted on paperwork. The implementation of TFA on the global level could increase GDP by about half a per cent and increase exports by 2.7 per cent per year.

To enter into force, the agreement required domestic ratification by two thirds, that is, 110 of the WTO member states. The agreement will now enter into force in those countries. The agreement will be binding on all WTO members, as soon as they implement the agreement domestically.

There are currently 164 WTO members. The EU ratified the Trade Facilitation Agreement in October 2015.